Ontario dairy farmers under pressure to find new outlets for some milk products

Friday, October 31, 2014

by SUSAN MANN

Milk protein ingredient imports into Canada have grown dramatically during the past nine years and are continuing to replace some of the fresh domestic milk sources of protein for cheese making and the skim milk solids in yogurt manufacturing.

Delegates at Dairy Farmers of Ontario’s fall regional meetings held across Ontario earlier this month were told the imports have grown to 15,000 tonnes a year currently from 3,500 tonnes a year in 2005 – an increase of nearly 430 per cent.

“The Canadian border is wide open to imports of milk protein concentrated dairy ingredients” from the United States, Mexico and will also be open for countries in the European Union once the Canada-EU trade agreement is implemented, according to a state of the industry report from Dairy Farmers of Ontario released at the meeting.
 
The growth in the milk protein ingredient imports and their use in dairy processing is the major contributing factor to the growth in the structural surplus in Canada. The structural surplus is the portion of skim milk solids that isn’t required by the domestic market. The solids are generated as part of the supply management system’s primary goal to meet the domestic butterfat demand.

Dairy Farmers of Ontario general manager Peter Gould says most skim milk in the structural surplus ends up as skim milk powder that has to be marketed into animal feed unless other uses can be found for it.

The Canadian Dairy Commission estimates the total structural surplus for this dairy year at 78 million kilograms of skim milk powder with about 50 million kilograms destined for animal feed, the Ontario report says.

Processors consulted in search for alternate domestic market uses

The Canadian dairy industry has made it a priority this year to negotiate with processors on implementing a strategy designed to find alternate domestic market uses for the significant skim milk solids surplus in the Canadian market. In addition, the strategy involves creating an environment in the dairy industry “where it’s more conducive to make milk protein isolates or milk protein concentrates so that other processors can use them in that form,” Gould says.

Some processors like to use the milk protein isolates or concentrates for cheese making, he adds.

Gould also says “if we could use some skim milk in infant formula that was exported to China that would be a good outcome.” There is an infant formula company in the works in Scarborough but “it is not progressing as quickly as we had hoped.”

Dairy farmer representatives in Canada’s 10 provinces have prepared a working document outlining their ideas and “that has been shared with processors across the country,” he says. Dairy farmer leaders in each province met with the processor organization within their province. The processors are “collaborating with a view to having one response for processors in Canada,” Gould says.

He notes it’s expected processors will respond before the end of November “and then the intent is to figure out how to begin the negotiations. We don’t have any insight into what their response is going to be but our reasonable expectation is they’re not going to agree 100 per cent with what producers have proposed and they might include some additional elements. We’re going to have to negotiate the outcome for the industry.”

Preliminary budget presented

In other news from the Dairy Farmers of Ontario fall regional meetings, the organization’s staff presented a preliminary budget for the 2015 fiscal year calling for a one-cent per hectolitre increase in the producer licence fee. It is slated to go to 62.5 cents a hectoltire from the current level of 61.5 cents a hectolitre. The last time the fee was increased was in 2012. There would be no change in the two cents a hectolitre fee for the on-farm food safety program, Canadian Quality Milk.

The 2015 budget projects revenues to be $18.04 million and expenses to be $18.5 million with a deficit at the end of the fiscal year of $474,906. For the 2014 fiscal year, Dairy Farmers is forecasting to finish the year ending Oct. 31 with an $87,000 deficit. It had projected to end the year with a $66,620 surplus.

The Dairy Farmers board was to review the 2015 budget and give final approval in late October. Officials didn’t get back to Better Farming on whether the budget had been passed. BF